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Whether secured creditor can enforce rights over an asset subject to a freezing order

The claimant obtained a freezing order against the defendant, restraining it from dealing with its assets. A secured creditor of the defendant then wished to enforce its security, despite the freezing order, and sought the permission of the court to do so.

Mann J held that a secured creditor in a normal enforcement situation (ie not collusive or aiding the breach of the order) does not need to apply to the court for a variation of the freezing order before enforcing its security. That is because a freezing order does not give security and does not affect the genuine rights of third parties over the frozen assets. Nor would this amount to a dissipation, because the secured creditor had a prior right in the form of security over the assets. This differs from eg a defendant wishing to withdraw money from a bank account, because that is a disposal by the defendant, not the bank.

Accordingly, the creditor did not need to seek the court's permission in this case. This case was no different just because there was an issue regarding ownership of the assets in question. If it subsequently transpired that the defendant did not own the assets, that was an issue between the defendant and the secured creditor.

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